Gloucester City Council is to plough ahead with borrowing £80million from the bank to invest in property.

The move is despite fears the “gamble” could potentially bankrupt the authority – and force tax-payers to foot the bill.

The authority is to embark on an ambitious programme of investment across the UK with the aim of making more than half a million pounds in profit from rent, if it can pay off £3.25m loan interest a year.

Despite refusal to back the plan from labour and the Lib Dems, the ruling Conservative party pushed through the move.

The authority hopes the plan can help fill a £2.6million black hole in the council’s accounts by 2022 as it claims it cannot cut council services anymore.

Gloucester City Council's bold move hopes to make £711,000 a year - if all goes well

But Liberal Democrat leader councillor Jeremy Hilton (Kingsholm) said this “speculation” could potentially bankrupt the council if it did not go to plan.

“This is one of the most reckless things I have seen this council do. If you get this wrong you could bankrupt us.

“I think they forget not so long ago selling our housing stock to Gloucester City Homes for £65million to clear a debt because it couldn’t borrow anymore.

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After paying back the annual loan interest bill of £3.25million and other costs it expects to make £711,493 a year profit from the move.

But while councillor David Norman MBE, cabinet member for performance and resources, said they would not necessarily spend all of the money, according to its own calculations it would have to do so to fill the £2.6m gap in its accounts by 2020.

What Gloucester City Council intends to buy with its £80m

Overall the portfolio will have a target balanced portfolio yield of 5.75%Individual lot sizes of up to £20m will be considered

Larger lot sizes will be favoured

The council is investing to hold. It is not looking to actively trade commercial property

It’s spreading the risk by buying properties across the range of different property asset classes, namely retail, leisure, office, industrial and potentially residential

In order to not over expose the council to one particular geography, properties outside of the council’s area will be favoured initially

It is not aiming to regenerate Gloucester with this money but simply make decent returns on its investment

As the portfolio gets larger, a mix of locations will be sought to create a balanced portfolio

Good, commercially strong locations to protect capital value and ensure ongoing occupier demand. E.g. for retail good out-of-town retail clusters/parks; for offices close to transport infrastructure and catchment for employees; for industrial close to major road / rail hubs

No ‘Sin’ assets – anything which could be deemed as likely to bring the Council into disrepute or potential conflict, e.g. gambling, alcohol, political or religious buildings

As the portfolio gets larger, a mix of tenants will be sought to create a balanced portfolio

A maximum exposure of 15 per cent to one tenant will be sought once the full investment budget is exhausted

But financial experts have urged caution with the move as the uncertainly over the market in coming years due to Brexit.

Defending the proposal, councillor David Organ (Con, Tuffley) said it was better than doing nothing.

“I have been in property most of my life and in development terms this is very little. It does not by us very much,” he said.